The market created by domain registration treats domain names like fungible investments that derive value from certain events (such as celebrity dramas, or natural disasters) or bet on future outcomes that may increase the demand for particular domain extensions (although ICANN has rejected the use of .xxx as an ‘online red district’ designation, the commercial value of registering domains with that particular TLD is obvious and akin to making investments based on pending regulatory decisions).
However, trademark plays a major role in domain registration when a ‘domainer’ becomes a cybersquatter who in bad faith intends to commercially benefit from a domain that derives its value from the value of the goodwill of someone else’s trademark. Bad faith includes acquiring the domain name primarily to sell or rent it to the rightful trademark holder or their competitors, or generally profiting from the likelihood of confusion with someone else’s trademark. Cybersquatters can monetize their doman registration by posting paid links or advertising related to the trademark to attract users seeking information related to that trademark. Whereas investing in domains with particular characteristics is not particularly different from other forms of fungible investing, the market for domain names have led to various forms of ‘bad faith’ registration, such as typosquatting (also bluntly called URL hijacking), which relies on Internet users’s typos when inputting a website URL into a browser to direct users to their domain.
ICANN’s UDRP policy allows a trademark holder to dispute a domain name if it is confusingly similar to their trademark or service mark, has been registered and is being used in bad faith, and the squatter has no legitimate interests in the domain name (registering a domain with a trademark ). The Anticybersquatting Consumer Protection Act (ACPA) goes on to establish cause of action for registering, trafficking in, or using a domain name confusingly similar to, or dilutive of, a trademark. But the distinction between a trademark-infringing cybersquatter and shrewd domainer is not always clear (for example, compare a domainer who owns two character domain names that later become valuable to a trademark holder – such as BN.com for Barnes and Noble or AE.com for American Eagle Outfitters – to one who has registered http://wwwwikipedia.org.)
In People for the Ethical Treatment of Animals v. Doughney, the court found that the defendant, who registered peta.org to create a website called ‘People Eating Tasty Animals’, was creating a parody and had the first amendment right to do so. However, when Doughney made statements suggesting that PETA should “settle” with him and “make him an offer,” the court saw this as an attempt to profit from his domain name and ruled that he had violated the ACPA. The nuance between profiting from a recognized trademark and parody is among many gray-area issues surrounding cybersquatting, which the court has noted in this particular case.